Waze employees clinch most lucrative exit in Israeli history; Each of the company’s 100 employees will be getting an average of $1.2 million

June 14, 2013 Leave a comment

Waze employees clinch most lucrative exit in Israeli history

Each of the company’s 100 employees will be getting an average of $1.2 million.

By Amir Teig | Jun.13, 2013 | 9:12 AM |  2

The 100 employees of the Israeli navigation app developer Waze stand to receive a total of $120 million, as a result of Google’s acquisition of the company, making this the most lucrative exit ever for employees of an Israeli startup. The global search giant confirmed on Tuesday that it had agreed to purchase Waze for $1.15 billion.

Prime Minister Benjamin Netanyahu called Waze CEO Noam Bardin on Tuesday evening to congratulate him on the sale. “We fought to keep the company in Israel,” Bardin said in response. “We’ll help you close the hole in the budget,” he added, partially in jest but also in pride.

Of the $1.15 billion that Google transferred into the account of Waze’s shareholders’ trustee, $1.03 billion will be going to the company’s owners, which include institutional investors, funds and other investors.The remaining $120 million will be going to workers over the next four years. This includes $45 million they’ll be receiving in exchange for options and shares they hold, and another $75 million to be paid as compensation. These figures were hashed out between Waze’s management, shareholders and Google’s representatives.

Waze has many newer employees who don’t own options, so the compensation structure − which includes cash payouts − is intended to serve them as well. The money will be divided up by management based on employees’ contributions, and not necessarily seniority.

But employees will receive an average of $1.2 million each before taxes.

In addition, Waze’s employees will be benefiting from Google’s employee retention plan, as part of the deal hashed out. This means that Waze employees who are still with the company four years after the acquisition will be eligible for another payout.

Waze is a relatively young company, with many workers in their 20s and 30s, as is typical of companies that develop applications for mobile platforms. In contrast to many larger software companies, a large proportion of Waze employees are just starting out in their careers. The company employs programmers as well as graphic artists who developed its interface, and customer service representatives who speak various languages. Employees earn salaries that are above the Israeli average but relatively low compared to those at other high-tech companies.

The fate of the employees was one of the main subjects that came up in negotiations − first with Facebook, and when that fell through, with Google. The management insisted that the company stay in Israel, and that it remains an independent entity. The management sought to ensure that the employees profited from the sale and retained their jobs.

Facebook had hesitated about keeping the company in Israel, but Google was clear in its commitment to this.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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